In Profile

A Conversation With Ron Barrett

New Timelines

by P.E. Kelley

Mr. Kelley is managing editor of this magazine. Connect with him at pkelley@lifehealth.com.

Among the myriad disruptions of our shared Covid experience, many investors, including those who had thought they were ready to ease into retirement, began to reassess the viability of their income plans. Suddenly, what had seemed secure began to appear less so, as many questioned if they would simply need more assets to get them safely through longevity. As dogged inflation sapped investor confidence, Americans turned more risk-averse.

A 2023 study by F&G Annuity & Life, its 4th annual Risk Tolerance Tracker, tapped into this growing malaise and revealed a clientele that believed ‘their safety net had been taken away.’ And yet, despite the fact that American investors were increasingly more distressed about their financial futures than they were at the height of the pandemic, many were still not taking action to address these concerns.

Ron Barrett is senior vice-president for Annuity Distribution with F&G. He spoke with us about this latest Risk Tolerance Tracker, which identifies a combustible package of worries and concerns keeping investors awake at night: from inflation to the 2024 elections, the threat of recession and the burden of global debt… even the  confusing influence of Generative AI on our ability to see and understand the world around us. More than ever, it appears, your clients are looking for reassurance that they are invested adequately.

PEK: What findings from the Risk Tolerance data stood out to you?

RB: When we launched the Risk Tolerance Tracker in 2020 during the height of the pandemic, respondents understandably were rethinking their approach to taking risks – both financially and personally. Over the last few years, we’ve found American investors are increasingly more distressed about their financial futures than they were a few years ago, but many are still not taking action to address their concerns. 

This year we also saw that inflation isn’t the only thing keeping people up at night. The survey also found that 75% of investors are worried about the next Presidential Election – almost as much as they are still worried about the risk of the U.S. entering a recession (79%). While things have been improving in the economy, consumers don’t seem to be feeling it yet.

PEK: Compared to last year, how has investor sentiment changed?

RB: One thing that hasn’t changed: Inflation may be slowly decreasing, but Americans’ concerns aren’t.

Even though inflation has started to cool (CPI rate has actually trended downward over the last year from 6.5 % in December 2022 to 3.4 % in December 2023), the vast majority of American investors (85%) are still worried about inflation impacting their financial future – an increase from 79% in 2022. 

We’ve also seen significant shifts in the number of American investors that feel like their financial safety net has been taken away from them. The survey found a decrease from 2022 (67%) vs 2023 (60%). However, this is still much higher than 2021 (47%) and 2020 (51%) respectively.

There could be a variety of things contributing to these trends over the last few years with so many “unprecedented” events happening in quick succession – COVID-19, wars in Ukraine and now in Israel, market volatility and of course, inflation, among other issues.

For advisors with clients who are worried about inflation, running out of money in retirement, or anything else that they believe can impact their financial future, it’s important to reinforce that there is no reason to stay passive...

PEK: What is the biggest takeaway for financial advisors?

RB: With so many major events and uncertainties impacting American’s wallets, having an advisor has never been more critical. However, too many people are not getting professional financial advice.

Our survey found 65% of survey respondents are still not seeking professional financial guidance, a figure that has only risen since 2020 when 48% said the same. At the same time, nearly half of investors (42%) said they would be more likely to explore new financial products, something that financial professionals are well suited to counsel them.

One thing that has been consistent are the reasons American investors say they avoid getting a financial pro – whether that’s high fees (36%), not having enough investable income (30%), or feeling they are only invested in basic investment types where they don’t need advice (23%).

Despite these concerns, it’s no secret that financial advisors are a much-needed resource and key relationship to achieve ongoing financial wellness, sound retirement planning and a tailored mix of products to suit unique needs and goals.

Lastly, I would flag for advisors that despite 68% of Americans worrying about retirement income our survey found only 14% of respondents reported owning an annuity. Advisors have a prime opportunity to present clients solutions that can address these issues including inflation. They are also uniquely suited to help hedge against the risk of outliving your money. 

PEK: What are the implications of inflation in the short and long-term when looking at this data and how investors are viewing risk?

RB: As I mentioned, even as inflation begins to slowly trend downward, it continues to be top of mind and felt by many investors.

Ultimately, while they may sound like a broken record, advisors need to be vigilant in reminding clients that they shouldn’t be reactive or panic – regardless of how the market is performing. Instead, they should work collaboratively to help them design a road map and solution for long-term success based on individual needs vs trying to time the market for their retirement investments and products. 

PEK: Do you think this is a bad time for advisors to suggest their client retire?

RB: As most advisors know it really depends on a person’s unique life situation and financial goals. There’s no one-size-fits-all formula for an investor based on age. The key is to work together with your clients to ensure their plan is taking a personalized approach. Tailoring your client’s strategy to their individual goals and situation ensures the best outcome and helps them make informed choices, regardless of what is happening in the market.

PEK: Based on the survey what do you think is the biggest missed opportunity for American investors?

RB: Remember, it’s never too late for your clients (and potential prospects) to take action. We found nearly half (48%) of American investors say they are adjusting their retirement plan during this period of heightened inflation, showing that many Americans continue to feel like their plan needs updating.

For advisors with clients who are worried about inflation, running out of money in retirement, or anything else that they believe can impact their financial future, it’s important to reinforce that there is no reason to stay passive. Educate them on the value of products such as annuities to address these risks. It’s critical to continue to address their concerns sooner vs later to ensure they can accomplish their goals in the future.

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